Correlation Between China Airlines and China Ecotek
Can any of the company-specific risk be diversified away by investing in both China Airlines and China Ecotek at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining China Airlines and China Ecotek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Airlines and China Ecotek Corp, you can compare the effects of market volatilities on China Airlines and China Ecotek and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in China Airlines with a short position of China Ecotek. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Airlines and China Ecotek.
Diversification Opportunities for China Airlines and China Ecotek
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between China and China is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding China Airlines and China Ecotek Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Ecotek Corp and China Airlines is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on China Airlines are associated (or correlated) with China Ecotek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Ecotek Corp has no effect on the direction of China Airlines i.e., China Airlines and China Ecotek go up and down completely randomly.
Pair Corralation between China Airlines and China Ecotek
Assuming the 90 days trading horizon China Airlines is expected to under-perform the China Ecotek. In addition to that, China Airlines is 1.5 times more volatile than China Ecotek Corp. It trades about -0.27 of its total potential returns per unit of risk. China Ecotek Corp is currently generating about 0.13 per unit of volatility. If you would invest 6,020 in China Ecotek Corp on December 5, 2024 and sell it today you would earn a total of 120.00 from holding China Ecotek Corp or generate 1.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
China Airlines vs. China Ecotek Corp
Performance |
Timeline |
China Airlines |
China Ecotek Corp |
China Airlines and China Ecotek Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China Airlines and China Ecotek
The main advantage of trading using opposite China Airlines and China Ecotek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Airlines position performs unexpectedly, China Ecotek can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in China Ecotek will offset losses from the drop in China Ecotek's long position.China Airlines vs. Eva Airways Corp | China Airlines vs. Evergreen Marine Corp | China Airlines vs. Yang Ming Marine | China Airlines vs. China Steel Corp |
China Ecotek vs. CHC Resources Corp | China Ecotek vs. China Steel Chemical | China Ecotek vs. TTET Union Corp | China Ecotek vs. Standard Foods Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
Fundamental Analysis View fundamental data based on most recent published financial statements | |
Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |